India To Ramp Up Purchases Of US Oil, Arms, Aircraft; Open Some Farm Access

India has agreed to buy petroleum, defence goods, and aircraft from the U.S., while partly opening up its highly-guarded agriculture sector under a trade deal, according to a government official, as the two sides reconcile after months of tensions.

President Donald Trump announced a trade deal with India on Monday that slashes U.S. tariffs on Indian goods to 18% from 50% in exchange for India halting Russian oil purchases and lowering trade barriers.

Trump said India agreed to buy more American goods with purchases rising to as much as $500 billion including energy, coal, technology, agricultural and other products.

The Indian government official, who did not want to be named, said India has agreed to buy U.S. goods including telecom and pharmaceuticals and offered market access for some agricultural products, as part of New Delhi's commitments under the deal.

India recently offered select market access for agricultural products to the European Union under a trade deal.

The Asian nation has also lowered tariffs on imported cars to address Washington's immediate U.S. demands to conclude the first tranche of the deal, the official added.

India's trade ministry did not immediately reply to an e-mail seeking comment.

India's exports to the U.S. rose 15.88% year-on-year to $85.5 billion in January-November, while imports stood at $46.08 billion, Indian government data showed.

"The commitment to buy U.S. products covers sectors like pharmaceuticals, telecom, defence, petroleum and aircraft. It will be done over the years," the official told Reuters.

The official said a more comprehensive pact with the U.S. will be negotiated over coming months.

Also read: India-US Trade Deal To Attract FIIs, Support Exports And Boost Economy

DEAL LIFTS SENTIMENT

The announcement of a trade deal between India and United States has reduced a great deal of global uncertainty, India's economic affairs secretary, Anuradha Thakur, said at an event in New Delhi on Tuesday.

It also lifted investor sentiment. India's benchmark stock index, the Nifty 50, was up nearly 3% and the rupee climbed over 1% to 90.40 per dollar in early trading.

The 18% tariff offered to India is lower than its Asian peers and comes right in time as exporters are still negotiating annual contracts with their U.S. customers, the official said.

Among Asian nations, U.S. tariffs on goods from Indonesia stand at 19% while the rate for Vietnam and Bangladesh stands at 20%.

"Lower tariffs will not only improve price competitiveness but also help Indian exporters integrate more deeply into U.S. supply chains,” said S.C. Ralhan, president of the Federation of Indian Export Organisations.

Reduction in U.S. tariffs on most Indian goods will reinvigorate India's goods exports to the U.S., Moody's Ratings said in a statement on Tuesday. 

Also read: Jeffrey Sachs: US–India Trade Reset Shows American Weakness, Not Power